Bernie Sanders' deceptive tax numbers

News stories say some posted on Facebook that Bernie Sanders proposed a 52% tax rate on all income over $29,000. The posts went viral. The assertion is false, so many in the mainstream media pounced. Yet Google News search results for {Bernie Sanders 52% tax $29,000} show significant  media bias. Defending Sanders far outweighs any critical analysis of his proposals. BS proposes to pay for his spending spree here.

The Facebook posters conflated two things. The truth is BS wants a payroll tax of 4% of income over $29,000 and an income tax of 52% of income over $10 million. He also wants to increase the Social Security payroll tax rate 6.2% on income over $250,000 (the smaller maximum wage base more accurately and the rate is now 0%). Adding them makes a tax rate of 62.2% of income over $10 million. None of the media stories I read reported the 62.2% or even 56% (= 52% + 4%).  (For Schedule C income it may be more, 68.4%, since the person must also pay the employer's 6.2% Social Security payroll tax. On the other hand, it may be somewhat less due to the qualified business income deduction.) Most also gloss over the other income tax hikes Sanders proposes on incomes much lower than $10 million, starting at 40% on income over $250,000 (link), which the first Sanders link above even omits.

The marginal income tax rate at $250,000 for married filing jointly is 24%; for a single it is 35%. So BS proposes a 16% tax rate increase for married filing jointly; 5% for single.

Regarding his proposed tax of 4% over $29,000 to pay for Medicare For All, the first link says: "In 2018, the typical working family paid an average of $6,015 in premiums to private health insurance companies.  Under this option, a typical family of four earning $60,000, would pay a 4 percent income-based premium to fund Medicare for All on income above $29,000 – just $1,240 a year – saving that family $4,775 a year.  Families of four making less than $29,000 a year would not pay this premium."

If the current 1.45% payroll tax for Medicare isn't eliminated, then BS sweeps it under the rug. Also, the picture is quite different for an income of $250,000, which is middle class in some places (e.g., Silicon Valley, NYC). 4% * ($250,000 - $29,000) = $8,840. So there is more tax and likely no savings for them! Even for a $200,000 income 4% * ($200,000 - $29,000) = $6,840, which is still more tax and likely no savings.

To fund the Green New Deal he proposes "collecting $2.3 trillion in new income tax revenue from the 20 million new jobs created by the plan." He says nothing about how many jobs his plan would eliminate. The number of unemployed people in the U.S. last month was only 5.89 million! So that implies eliminating several million jobs. The $2.3 trillion, which is very likely for 10 years, looks inflated in two ways -- number of jobs and tax rate. 20 million * $60,000 * 0.20 tax rate * 10 years = $2.4 trillion. For an income of $60,000, the average effective income tax rate is only about 10%. So the $2.3 trillion appears to be several times a realistic number.

World Bank's pandemic bonds

The World Bank issued the bonds in 2017. They mature in July, 2020. Their value has dropped sharply recently with the news about the coronavirus. Reuters.  Wall Street Journal (paywalled).

Sanders' and Warren's lack of sacrifice

Forbes: Senators Sanders And Warren Strongly Endorse The Benefits Of Private Jet Travel

I don't believe Sanders or Warren is sacrificing or inconveniencing themselves enough. Why are they riding in private jets when commercial flights are available? The Forbes article says they buy carbon offsets, but the payment is probably from campaign funds that other people have contributed, not Sanders' or Warren's personal money. They also preach aplenty about "saving the planet" and against carbon dioxide emissions. Shouldn't they make a greater effort to practice what they preach? Or are they simply taking advantage of their elitist status, which we in the unwashed masses aren't entitled to?

I believe the comparison to CEOs taking private jets is weak. That was 12 years ago when the climate doomsayer talk wasn't so loud, and the CEOs weren't preaching doom.

I plan to make three round trip flights this year. The fares will be paid from my own pocket and the only private jet I have ever used is in my name. 😇

Bernie Sanders is being greedy and stingy with all the campaign money he has amassed, too. Why doesn't he redistribute the wealth to his more needy campaign rival Amy Klobuchar? 😉

ProPublica never satisfied

The IRS and providers of free software for filing income taxes recently signed a new agreement that is hoped will increase usage of said free software on the IRS's Free File website. I wrote about it here February 9.

ProPublica is still not satisfied and continues its smear campaign against Intuit, maker of TurboTax, with this article. As usual it has plenty of deception, half-truth, and use of double standards. As usual the IRS or non-savvy people hoping to file for free bear no responsibility for what ProPublica feels is unjust. All blame goes to the software providers, especially Intuit and TurboTax.

Before saying more about the article and to clarify, there are two free versions of TurboTax. The "Free File" version is the one accessed via the IRS's Free File website, which also hosts several competitor products. The "Free Edition" version is not part of the IRS's Free File program. If somebody tries the former and discovers they fail to qualify, they will not be offered a pay version of TurboTax. They will be directed back to the IRS Free File website to start all over again with a different product. If somebody tries the latter and discovers they fail to qualify, they will be offered a pay version of TurboTax capable of handling their situation.

The following are some assertions in the article and my comments about them.

1. "Intuit does not advertise its Free File offering on Google."

Why does ProPublica feel Intuit should pay to advertise something that will produce no revenues for Intuit? The IRS gets the tax revenue, so why shouldn't the IRS pay for all advertising of the Free File program? Why does ProPublica believe Intuit should pay to advertise a website that hosts several products that compete with TurboTax? Furnishing the software costs Intuit time and money, and some people get to use it for free. Why is ProPublica so ungrateful and mean-spirited?

2. "Google searches for 'free tax filing' and other similar phrases still yield ads for a plethora of products such as TurboTax’s 'Free Edition'. ... TurboTax’s version of Free File — the one that doesn’t charge customers anything — typically won’t appear until the second page of search results.”

The Free Edition doesn't charge customers either. Anway, so what? If a person searches for "free tax filing," shouldn't he or she be informed that TurboTax’s Free Edition exists? Or is ProPublica out to prohibit Intuit from advertising? When is ProPublica going to try to prohibit the IRS from advertising its Free File program?

3. "Intuit places its ads strategically in searches for “IRS” and “free file,” among thousands of related search terms."

This baffles me. What is the author's point? Anyway, I did that search. The first non-ad search result was www.irs.gov › filing › free-file-do-your-federal-taxes-for-free. So Intuit is not making it difficult to find the IRS Free File website. The first non-ad search result shown in the screenshot in ProPublica's article is to https://apps.irs.gov/app/freeFile/. So again Intuit is not making it difficult to find the IRS Free File website. Where's the beef?

Additional comments

Nowhere in this article does ProPublica tell readers how to find the IRS's Free File website, which is where you will go if you click on the link in that first non-ad search result.

Again ProPublica doesn't complain about a person not passing the criteria to use the Free File version and later finding "a dead-end street" after wasting a lot of time entering data. However, ProPublica loudly protests somebody not passing the criteria to use the Free Edition version and not "finding a dead-end street" since they can switch to a pay version.

Using the IRS's Free File link, the second option says "Income above $69,000" & "Free File Fillable Forms."  Is a person required to have income above $69,000 in order to use said forms? No, but ProPublica hasn't accused the IRS of false advertising.

Addenda 2/23/2020

Justin Elliot has led ProPublica's smear campaign against Intuit, maker of TurboTax. He got this article published by HuffPost. The title, 'Congress Is About To Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.' is both misleading and false. The IRS already offers 11 ways to file free online now, and Congress isn't trying to eliminate them. There are 10 software options in the Free File program. The 11th is the IRS's own Free File Fillable Forms. As said above, a person is not required to have income above $69,000 in order to use said forms.

Again Elliot fails to mention VITA,TCE, and AARP, which prepare millions of tax returns for free and online.

Barbs about Astros' sign stealing

The Houston Astros have been accused of stealing signs from opposing teams. The stealing is mainly to find out what sort of pitch is coming next to an Astros batter. The methods aren't traditional, including banging on garbage cans, and there have been a lot of comments made about it. This story from the Associated Press includes some amusing barbs about it and Astros star player Jose Altuve's partial tattoo.

Today's print edition of the Cleveland Plain Dealer had much the same article but a different title -- Sign stealers have rights, too, you know. 😊

Here is a Plain Dealer article dated last month about the scandal that draws a fine line between cheating and gamesmanship in baseball. It includes humor, too.

Why You Shouldn’t Be A Socialist #3

The author devotes a chapter to critics of socialism with ‘Why Opponents of Socialism Are All Wrong’ as part of the title.

One criticism is that socialists always deny that socialist governments are “true socialism.” Ironically, that’s what Robinson does. Referring to critics using Venezuela to discredit socialism, Robinson denies Venezuela is a case of “true socialism.” He dismisses North Korea being called socialist simply because it isn’t democratic (245). So does he believe North Korea is capitalist? Heh. He chides others who treat socialism as synonymous with the Soviet Union for being selective in their presentation of history. Yet he is very selective about what he considers “true socialism.” “The socialist left has a great heritage, both in the United States and everywhere else.” “To be a socialist is to take part in a tradition that is intelligent, humane and honorable” (162). An even blacker pot calls the kettle black.

While most socialists are advocates of government control of the economy, Robinson tries to “sweep it under the rug” by saying there are a few socialists who “loathe the government.” This tactic is quite ironic. He calls himself a libertarian socialist, yet several times he says the left needs more political power and better organization. He also strongly endorses Bernie Sanders, an advocate of much more government power and putting chains on private sector businesses. By the way, Bernie Sanders calls himself a Democratic Socialist, but more accurately he is a fascist. Like described here fascism permits some private ownership of the means of production, but subject to extensive controls by government: "As an economic system, fascism is socialism with a capitalist veneer." "Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture. Planning boards set product lines, production levels, prices, wages, working conditions, and the size of firms." State control is paramount. This captures Sanders’ proposal for health insurance. He wants to eliminate private health insurance by the U.S. federal government taking over all health insurance, like Josef Stalin took over agriculture in the Soviet Union. More recently he has advocated government takeover of electrical power producers.

Robinson’s praise of socialism is based mostly on wishful thinking inspired by moral outrage. He gives no realistic causal mechanism of how socialism will work in practice. His “theory” boils down to:
- dreaming of utopias,
- moral outrage,
- lecturing by a self-appointed moral authority,
- nobody will need to work at an unpleasant job, e.g. garbageman or roofer (my opinion), or due to a boss, or a boring job, but somehow the work will get done anyway,
- nobody will be poor regardless of whatever else they do or don’t do,
- lots of “free stuff” paid for by others, expropriated,
- who produces what, how, where, and how much of a large, ever-changing, wide variety of goods and services in a society of millions of people with dispersed, yet localized, knowledge is no concern to Robinson. It will happen just fine; no causal explanation needed.

The End

Edit (2/17):

I tried to put a book review of Why You Should Be a Socialist on Amazon and met a barrier that was new to me.

"We apologize but this account has not met the minimum eligibility requirements to write a review. If you would like to learn more about our eligibility requirements, please see our community guidelines." The guidelines say to post a review you must have spent at least $50 on Amazon.com in the past 12 months. I did spend more than $50 in the past 12 months. However, part was with a gift card, and my net spent was less than $50. 🙂

Why You Shouldn’t Be A Socialist #2

Robinson misunderstands limited liability. A key feature of incorporation is that non-employee stockholders have limited liability for actions made by employees. Why should the former, who have minimal control on how the corporation is run, be held personally responsible -- beyond the worth of their stock -- for the actions done wholly by others, employees? Even trying to make them responsible is a big conundrum. The ownership of publicly-traded stocks of big companies is ever-changing. (If non-employee stockholders are personally responsible, then why not lenders, too?)

Robinson abuses the concept of marginal utility. It was developed to explain an individual’s valuation, not different valuations by different persons like he does. He shows no understanding of marginal utility’s importance to market prices or the division of labor.

All but one of his “explanations” of why opponents of socialism are wrong (Chapter 12) are weak or wrong. His response to one alleged criticism of socialism -- that socialists are boring and humorless -- isn’t worth further comment.

He says critics say socialists dislike freedom, but he says “Democratic socialists believe deeply in freedom.” He adds, “capitalism actually restricts people’s freedom. We believe that the choices capitalism gives people -- obey your employer or starve to death -- are not really choices at all “ (234). Huh? They can’t seek a different job, become self-employed (be their own boss), find free food from a charity, or sponge off relatives or socialist friends? He characterizes “free market freedom” as “the freedom to die when your medical bill exceeds your paycheck” (245). Oh my, so simplistic and so wrong.

One “freedom” that Robinson doesn’t mention is that many socialists approve of is a government free to use coercion and bullying against other people they dislike. The freedoms and rights of people they dislike matter little or none to them. When they decide who gets elected, that’s the road to democratic mobocracy, or as Karl Marx said it, the dictatorship of the proletariat.

To be continued.

Why You Shouldn’t Be A Socialist #1

Nathan L. Robinson’s book Why You Should Be A Socialist might convince some socialists they are wrong. It’s that poorly argued.

His critique of capitalism is a harangue and hate speech. Chapter 3 is even titled ‘The Army of Psychopathic Androids: How Capitalism Works.’ He shows at best a superficial understanding of how capitalism works. He shows no understanding of how markets develop and change, the price system, entrepreneurs, division of labor, risk, or the role of knowledge and information in economic production and distribution (see F. Hayek's work). Capitalism (or free enterprise) does not ban ownership by other than stockholders -- worker-owned firms, nonprofits, coops, credit unions owned by depositors, mutual insurance companies owned by policyholders -- none of which Robinson acknowledges. Such firms can exist in capitalism because it’s a voluntary, live and let live system. And if a business were worker-owned like Robinson says all should be, wouldn’t the workers then be capitalists? Or would they somehow operate with no capital, not even borrowing from outside lenders?

He makes many contrasts between capitalism and socialism. One he doesn’t make is voluntary versus coercive. That’s probably because of the following. In capitalism, or a free market, entrepreneurs create goods and services for customers to satisfy the latter's particular needs. They deal with suppliers and employees voluntarily. The entire system is voluntary; coercion is banned. Entrepreneurs are not forced to create, and they don't force investors to give them money, employees to work, or customers to buy their products. Government is the opposite - a system based on coercion. A politician's ability to get something of value for themselves or others is the power to coerce certain people to provide it for them.

“If a corporation were a person, they might be the worst person you have ever met in your life. They might manipulate you into doing things you don’t want to do, take advantage of your weaknesses, lie to you if it benefited them, and show zero regard for basic standards of moral conduct” (78). Does this describe Robinson’s own corporation, Current Affairs, LLC? Anyway, Johnson & Johnson’s reaction to the 1982 Tylenol poisoning contradicts his very biased portrayal. If any business treats its customers and suppliers with zero moral regard, the business will soon fail.

On p. 79 he misrepresents Milton Friedman's position. Friedman did not say a corporation's sole responsibility is to its shareholders and shareholders' only concern is profit. He said a corporation's main responsibility is to its shareholders, and he recognized that shareholders’ desires may include some sort of social responsibility. They also have a means of expressing that, via voting their shares. Some corporations contribute to charities and do charitable gift-matching. Friedman also qualified corporate social responsible action to include the business staying within the rules of the game, i.e., engaging in open and free competition without deception or fraud. Robinson blatantly ignored it. Very likely Friedman made these remarks when others were advocating greater coercion and bullying of business by those in government on behalf of some political view of "social responsibility."

To be continued.

Free File, Gov't Audit, ProPublica

The Treasury Department's Inspector General for Tax Administration conducted an audit of Free File program. IRS management did not, but could comment on the audit and did. Here is the audit report. Following is a summary.

To participate in the Free File program, taxpayers must access the IRS.gov Free File web page and choose a software application there, which directs them to a provider's (member's) website, e.g. TurboTax. Many taxpayers are unaware of this requirement  (They believe wrongly they can go directly to the provider's website.) Once on the provider's website, taxpayers are not guaranteed a free return filing. On the Free File site, the taxpayer faces a myriad of criteria for being able to utilize the various software applications.  Even if the taxpayer decides that he or she meets the criteria initially, upon entering his or her return information, the taxpayer could then be informed that the return no longer qualifies for free filing.

The modified agreement between members and the IRS requires the member to direct the taxpayer back to the IRS.gov Free File web page, where the taxpayer must restart the process to select a Free File offer. However, at this point the taxpayer has spent significant time on attempting to file, and thus may prefer to pay a fee rather than restart the time-consuming process. The auditor suspects this is why providers do not disclose all of their criteria on the IRS.gov Free File web page.

The auditor made 8 recommendations. The first 3 follow.
1. Better advertising of the Free File program and how to use it.
2. Require providers to fully disclose all criteria on the IRS.gov Free File web page.
3. Establish goals and performance metrics for the Free File program.

Regarding #2, IRS management said it had seen no evidence of any additional criteria being used to charge taxpayers!

How did ProPublica respond here?
1. They used the "scathing" audit as a chance to repeat their attacks on providers such as TurboTax and H&R Block.
2. They described the recommendations of the auditors.
3. They excused the IRS due to budget cuts

What's missing from their response? They said nothing at all about the scenario described above where the taxpayer attempts to use one of the Free File software application but fails. Like I wrote here, ProPublica invokes a double standard -- one for providers and a different one for the IRS! In ProPublica's view, all blame for the incomplete criteria on the Free File web site goes to the providers and none to the IRS, despite the site being owned by the IRS. I don't agree with the auditor's suspicion stated above. Hypothetically, if the criteria were complete, it would be more complicated, and even more taxpayers would be thwarted from using it. And who would ProPublica then blame for that? The providers 100% and the IRS 0%, of course.

Yahoo News, CBS News, and Daily Beast parroted and spread ProPublica's story.

In my personal experience as a volunteer, most taxpayers who come to us want help. Many want somebody else to do the work for them. Dealing with the software themselves alone is unpleasant. VITA and similar sites offer the most help in person. Software vendors' paid products offer far more help than IRS.gov Free File.

Amazon 2019, ITEP and its wake

ITEP published another erroneous and biased article about Amazon's income taxes, this time for 2019. I wrote about ITEP's reporting of 2018 results in December, 2019. This latest report asserts that Amazon paid only $162 million in U.S. federal income tax in 2019, an "effective" rate of only 1.2% of its U.S. income before tax of $13,285 million.

1. The $162 million is not income taxes paid; it is part of income taxes accrued in accordance with GAAP accounting principles and practices.
2. Amazon's 10-K page 63 clearly states it paid $881 million U.S. federal income tax in 2019. The author ignored it. 881/13,285 =  6.6%.
3. The author also ignored the other part of Amazon's 2019 GAAP provision for income tax, $914 million. Thus the "effective" tax rate was (162 + 914)/13,285 = 8.1%, not 1.2%!
4. The author says, "The company reports that it deferred $914 million of federal taxes to future years." This is wrong and backwards. The $914 million on page 64 of the 10-K is not deferred from 2019 to future years; it was deferred from past years to 2019. What the author describes goes on a balance sheet, not an income statement.

To illustrate, suppose Company X spent $500 million on capital equipment in 2018, GAAP requires spreading the cost over 5 years, but the IRS allowed all of it to be deducted in 2018. GAAP allowed deducting only $100 million in 2018. So $400 is deferred, with $100 million deductible each year 2019-2022. The tax effect is a tax rate times $100 million, or $21 million if the tax rate is 21%. So $21 million goes to the deferred part of Company X's 2019 provision for income taxes. Amazon's $914 million deferred income tax provision for 2019 is akin to Company X's $21 million for 2019.

Losses carried forward from earlier years may also affect a deferred provision for income tax. It appears to have reduced Amazon's 2019 provision by $34 million.

CNBC, Yahoo Finance, and The Verge parroted ITEP's report. I suspect Bernie Sanders will parrot it on the campaign trail, too.

Stand Out of Our Light #3

Reading Stand Out of Our Light was a refreshing change from reading The Age of Surveillance Capitalism, which I wrote about here. James Williams wasn't eager for a lot of government control the way Shoshana Zuboff was. Zuboff considers Google, Facebook, Twitter as enemies. She believes they have too much power over us and their platforms enable others having too much political influence. Williams in effect echoes Pogo, "We have seen the enemy and he is us."

For a more appreciative and optimistic article about personalized advertising, see this article. In my view it's too rosy, since there is some dark side to this new digital world. I sometimes get annoyed by being asked if I want to sign up for notifications, by popups, and having to scroll by several ads in order to read one article. I use an ad blocker. Fraud and scams lurk behind some advertising. On the other hand, I am amazed by the technology and appreciate a news feed that obviously recognizes my past attention.

Stand Out of Our Light #2

The last four chapters of Stand Out of Our Light concern our freedom of attention.

Chapter 10. Rejecting attentional serfdom may be the defining moral and political task of our times. To date, the problems of "distraction" have been minimized or minor annoyances. Yet the competition for attention and the "persuasion" of users ultimately amounts to a project of the manipulation of the will. Since the inception of modern advertising we have seen it continually seek not only to fulfill existing desires, but also to generate new ones, not only to meet people's needs and demands, but to produce more where none previously existed.

Chapter 11. Pitfalls are sidestepped and misconceptions are cleared. There are things we should avoid doing in response to the challenges of the attention economy. We must be vigilant of slipping into an overly moralistic mode. Metaphors of food, alcohol, or drugs can be signals of such over-moralizing. We shouldn't wholly rely on self-regulation by the advertisers or their platforms to solve all problems. Ultimately, there is no one to blame. At "fault" are more often the emerging dynamics of complex systems rather than the decision-making of a few individuals.

Chapter 12. Visions of rebellion and reform. A hand-drawn map to a place no one has ever been. In digital media, advertising rules. It has moved from "underwriting" the content to "overwriting" it. In advertising parlance, "remnant inventory" refers to a publisher's leftover space, which it can sell at very low prices. [This might refer to the many ads that appear below articles on my smartphone.] In the European Union, website owners must obtain consent from each user whose browsing behavior they wish to track with "cookies." [Here in the USA I have seen a flurry of these consent requests lately.]

Chapter 13. The music swells and the rocket hits. A new light appears in the sky. Rejecting the present regime of attentional serfdom requires rejecting the idea we are powerless. It means rejecting novelty for novelty's sake and disruption for disruption's sake. The right sort of redesign hasn't arrived yet, but it has begun. The degree to which we are able and willing to struggle for ownership of our attention is the degree to which we are free.

Stand Out of Our Light #1

Stand Out of Our Light is a book by James Williams. I enjoyed reading it, and it's short, only 130 pages.

It's about freedom and resistance in the attention economy, in which the Internet and smartphones are used to grab and keep our attention. The author used to work for Google but has since become a teacher of philosophy at University of Oxford. The title is derived from an amusing story told in Chapter 1 about the ancient Greek philosopher Diogenes. He sometimes walked in the daylight carrying a lantern. When people asked him why, he replied, "I'm looking for an honest man." (That's not the amusing story.)

The author prefers to call the current era the "Age of Attention" rather than the more common  Information Age. The abundance of information easily accessed puts demands on our attention. The new technologies, the Internet and smartphones, challenge self-regulation. The design of technology embodies certain goals and values, and thus shapes the world we experience. The cyber- in "cybernetics" and the gover- in "government" both stem from the same Greek root: kyber-, "to steer or to guide" (p. 27).

In the twentieth century the modern advertising industry matured and began systematically applying new knowledge about human psychology and decision making. Advertising scope extended beyond providing information to include shaping behavior and attitudes. The goals and metrics of advertising became the dominant ones in the design of digital services. Google, Twitter, and Facebook are at core advertising companies. [Advertising is their dominant source of revenue.] Initially "cookies" were created to enable "shopping carts." Now they follow us as we navigate on our devices.

Chapters 7-9 of the book are organized by three metaphors.
- The "Spotlight" - Our immediate capacities for navigating awareness and action toward tasks. Enables us to do what we want to do.
- The "Starlight" - Our broader capacities for navigating life "by the stars" of our higher goals and values. Enables us to be what we want to be.
- The "Daylight" - Our fundamental capacities -- such as reflection, metacognition, reason, and intelligence -- that enable us to define our goals and values to begin with. Enables us to "want what we want to want."
These "lights" of attention pertain to doing, being, and knowing (p.49).